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Home Purchase

Mortgage Seasoning Requirements | Cash Out Refinance Requirements

by Nicholas Auriemma, NMLS# 1455001
6 years ago
in Purchase, Refinance
Mortgage Seasoning Requirements Cash Out Refinance Requirements

Mortgage Seasoning Requirements | Cash Out Refinance Requirements

Looking for mortgage seasoning requirements? Rate and term, cash out refinance requirements, and bankruptcy and foreclosure seasoning vary by loan program. There are loan programs that have no seasoning requirements.

Delayed Financing – No Waiting Period

There are options with no seasoning requirements when the subject property was purchased within the past six months. You can request information about delayed financing exceptions. The purchase transaction must have been an arms-length transaction.

Fannie Mae Cash Out Seasoning

Fannie Mae cash out seasoning after purchasing a home can vary by lender. If a lender goes by Fannie Mae guidelines, the seasoning requirements are as follows:

You may be eligible for a Fannie Mae cash out refinance with a conventional loan if the property was purchased at least six months prior to the disbursement date of the new mortgage. Exceptions to the mortgage seasoning requirements are:

  • If the property was acquired through inheritance or legally awarded, such as separation, divorce, or dissolution of a domestic partnership.
    • Proper documentation is needed.
  • The six month waiting period can be applied if the property was owned by an LLC that is majority owned or controlled; or
  • Owned prior to closing by an inter vivos revocable trust.

Some lenders can have tougher seasoning requirements when it comes to cash out refinances due to not follow Fannie Mae guidelines.

Freddie Mac Cash Out Seasoning

Freddie Mac has similar cash out seasoning requirements to Fannie Mae for conventional loans.  If a lender has told you that the seasoning requirements are greater, that is because they have a lender overlay, which is an internal guideline on top of Fannie Mae and Freddie Mac guidelines.

FHA Cash Out Seasoning Requirements

FHA loans allow borrowers to cash out up to 85% loan-to-value for primary residences.  They can be easier to qualify for when it comes to credit and capacity than conventional loans.  FHA minimum property requirements can be more difficult than conventional appraisal standards.

For FHA cash out seasoning requirements, the property muse be owned and occupied for 12 months.  For a rate and term refinance and streamline refinances, requires six months to have passed from the first payment due.

No Seasoning on Investment Properties

There are investment programs that allow borrowers to cash out with no seasoning requirements.  Mortgage seasoning requirements often play a factor when it comes to favorable terms. For example, if a property is seasoned for three months, the terms can be more competitive.

These programs allow investors to qualify without personal debt-to-income ratios.  The property qualifies based on debt-service ratio also known as a DSR loan.

Bankruptcy and Foreclosure Seasoning

Mortgage bankruptcy waiting periods and foreclosure waiting periods vary depending on the loan program.  When following agency guidelines, bankruptcy and foreclosure waiting periods are as follows.

Bankruptcy Mortgage Seasoning Requirements

FHA loans require two years out from the chapter 7 discharge date. You can qualify while in a chapter 13 bankruptcy if:

  • You have one year satisfactory payout period on the chapter 13 bankruptcy.
  • Written permission from the bankruptcy court.

Some lenders may not allow this because they are not willing to manually underwrite a loan.

For a VA loan, there is a 24 month waiting period from the discharge date. VA guidelines on chapter 13 bankruptcies are similar to FHA loans – 12 months satisfactory payment and court permission.

USDA loans require a three year waiting period for a chapter 7. They do not require a credit exception for plans completed 12 months or greater.

Conventional loans require:

  • Four year waiting period after a chapter 7 or 11 bankruptcy.
  • Two years for a chapter 13 from the discharge date and four years from the dismissal.
  • If you were unable to complete the chapter 13 bankruptcy plan, there is a four year waiting period.

Foreclosure Mortgage Seasoning Requirements

USDA and FHA mortgage seasoning waiting period is three years out for a foreclosure, deed-in lieu, and short sale.

VA loans require two years out from a foreclosure, deed-in lieu, and short sale.

Conventional loans require four years out from a deed-in lieu of foreclosure, short sale, and charge off of mortgage account. A foreclosure has a seven year waiting period.  In the case that a foreclosure was discharged in the bankruptcy, the bankruptcy waiting period can be applied if there is appropriate documentation to verify the mortgage was discharged in the bankruptcy.

Loan Program with No Mortgage Seasoning Requirements

There are non-qm loan programs that allow no seasoning on derogatory events such as a short sale, bankruptcy, deed-in lieu, and mortgage charge off.  They require a larger down than traditional loans when purchasing, but also allow cash out refinances and rate and term refinances.

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Nicholas Auriemma, NMLS# 1455001

Nicholas Auriemma, NMLS# 1455001

Nicholas Auriemma is a Loan Originator at Nationwide Mortgage & Realty, LLC, providing information on mortgages that can often be confusing even to real estate and mortgage professionals. Borrowers can be discouraged because mortgage professionals can be mistaken due to guidelines always changing, the extent of guidelines, their company having an overlay (stricter guideline), or other lenders not offering a loan program. Call or text Nick anytime at 630-779-8430 or email at nick@nationwidemtg.net.

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Restrictions may apply. All loans are subject to credit, underwriting and property approval guidelines.  Nationwide Mortgage & Realty, LLC is not acting on behalf of or at the direction of HUD/FHA or any government agency. CO: Check license status of your mortgage loan originator at www.dora.state.co.us/real-estate/index.htm. Also licensed in: CA, FL, IN, NC, TN, VA, WI and TX: NMLS ID 276777. Virginia law says that finance charges may be higher in a refinance. Illinois Residential Mortgage License | MB. 6760210. WA: Consumer Loan License MB-276777. GA: Georgia Residential Mortgage Licensee 60857. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law.

  • Home
  • Request Information
    • Apply Now
  • About Us
    • Career Opportunities
    • Contact Us
    • Meet the Team
  • Purchase
    • Conventional Loan
    • Condotel & Non-Warrantable
    • FHA Loan
    • FHA 203k
    • Fix & Flip
    • Investment
    • Jumbo & High Balance
    • New Construction
    • Non-QM Loans
    • USDA Loan
    • VA Purchase Loan
  • Refinance
    • Cash Out & Debt Consolidation
    • Conventional Refinance
    • Condotel & Non-Warrantable
    • FHA 203k
    • FHA Streamline Refinance
    • Investment
    • Non-QM Loans
    • Reverse Mortgage
    • VA IRRRL
  • Loan Process
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